Dow Jones (DJ) Indexes and RBH Securities Sdn Bhd introduced the DJ-RHB Islamic Malaysia Index last Thursday, replacing the RHB Islamic Index launched in 1996.
“The new index will complement the Kuala Lumpur Shari’ah Index,” said Dato Sri Sulaiman Abdul Rahman Taib, Executive Chairman of RHB Capital Bhd, during a press conference in Kuala Lumpur, Malaysia.
The new index is hoped to stop the flight of capital from Muslim countries and not only serve Malayan investors, but also bring in investors from the North America, Europe, and the Gulf states, according to Dato Sri Sulaiman Abdul Rahman Taib and Rushdi Siddiqui, global director of Dow Jones’ Islamic Index group.
Companies must comply with Islamic religious guiding principles, by following Islamic Shari’ah law, before inclusion in the DJ Indexes. Companies with unacceptable levels of debt or impure interest income, defence- or weapons-related vendors, manufacturers of alcohol- or pork-related products, providers of entertainment services (such as casinos, cinemas, and hotels), and conventional financial services (such as insurance providers and banks) are excluded from DJ’s Islamic Indexes. Dividends are also excluded from index calculations.
DJ has its own Shari’ah Board with a total of six members, including Sheikh Yusuf Talal DeLorenzo of the US, Sheikh Dr. Mohd Daud Baker of Malaysia, and Sheikh Nizam Yaquby of Bahrain.
“The DJ-RHB Islamic Equity Index heralds another milestone in the growing Islamic financial markets. The merger of the DJ Islamic Index for Malaysia and the existing RHB Islamic Index, besides achieving some form of economies of scale with reduced duplication of effort, [will] add significantly to the international and domestic recognition,” said Bank Negara Malaysia’s governor, Dr. Zeti Akhtar Aziz, during the launching ceremony in Kuala Lumpur’s Convention Center.
Islamic sukuks (Arabic for bonds) have made inroads into the international market. Dubai, Qatar, Bahrain, and Malaysia have come to the market with sovereign sukuks. Multinational banks, including the World Bank International Finance Corporation and the Islamic Development Bank, have also issued sukuks.
“In 2004, ringgit-denominated Islamic debt continued to grow. At end-2004, 42 percent of securities outstanding were Islamic securities. For the debt markets as a whole, Islamic securities comprised 25.7 percent of total outstanding bond issues at end-2004,” said Aziz.
To benefit investors seeking to invest under Islamic investment guidelines, the DJ Islamic Market Indexes was launched on February 9, 1999, and the DJ Islamic Market Turkey Index was launched on September 28, 2004. The DJ Islamic Market family includes close to 50 indexes, divided into Global Indexes, Titans (Blue-Chip) Indexes, Industry Indexes, US Indexes, Europe and Eurozone Indexes, Asia/Pacific Indexes, and Other Indexes.
As of June 23, the DJ-RHB Islamic Malaysia Index included 45 companies. DJ’s World Index stocks number more than 5,400, while DJ’s Islamic Index stocks number close to 2,000.
Dow Jones Indexes is a member of Dow Jones & Company, which owns- among others- the Wall Street Journal, Barron’s and the Far Eastern Economic Review, MarketWatch, and CNBC television operations.
RHB Securities Sdn Bhd is a member of RHB Capital Berhad, an integrated financial services group in Malaysia and the ASEAN region. RHB Securities is the first standalone Islamic bank within this group.
Feeds